Brown's testing week

Brown has ruled out big fuel tax cuts

By BBC News Online political correspondent Nick Assinder

Chancellor Gordon Brown will this week make or break his reputation as the man who bails out the government.

As he approaches his crunch, pre-Budget report he is facing a series of demands for him to spend much of the giant surplus he has salted away.

Top of the list are pensioners and fuel protesters. And the way he handles these two interests could help set the seal on the government's future.

His previous budgets have been masterful exercises in quietly raising taxes to funnel massive amounts of cash into public services.

Just when ministers were feeling the first cold winds of disillusion from voters last year, Mr Brown produced a package that delighted and reassured them that the government really was doing radical things.

There were critics, of course. The Tories always accused him of levying huge stealth taxes on the country, and the results of his giveaways have not always fed through quickly enough.

But he was roundly viewed as one of the most successful post-war chancellors. Now he is facing a real challenge to his handling of the economy.

Fuel duty freeze

He insists he is not about to give in to protesters demands for across the board cuts in the cost of fuel, claiming it would lead to interest rate rises.

And it is now clear that the government believes the protesters are losing public opinion and is ready to take them on.

However, there have also been hints that Mr Brown will do something to help the worst affected.

The prime minister's spokesman said ministers recognised there were real concerns not only with hauliers and truckers, but also ordinary motorists but they had to be set alongside demands for investment in pensions, schools and hospitals.

But he added: "The chancellor will do what he can" - so there will clearly be some help in the pre-Budget report.

That may see a freeze on fuel duty and cuts in excise duty for truckers.

Major revolt

Probably more importantly, however, is what the chancellor does for pensioners.

Both he and Tony Blair are meeting pensioner groups before the statement on Wednesday in what is being seen as a sign that they will be given significant increases.

Ministers are insisting they are not playing off the fuel protesters against pensioners, but they are eager to stress that any big cuts to fuel taxes would impact on other spending.

What Mr Brown has to do on Wednesday, and then in next year's Budget, is show that the government has addressed the serious challenges over pensions and public spending more generally while, at the same time, heading of a major revolt over fuel taxes.

If he can pull it off - and most government backbenchers believe he can - then he will be seen as the man who put the government back on track after its roughest period since it came to office.